RBA weighs how to limit housing investment by year-end

Posted: October 2, 2014 in Uncategorized

The Reserve Bank of Australia is thinking how to limit the investment property market.

They are very coy about what they will do – but they will be very wary to kill the only sector going in Australia.

I think it is difficult they will be touching the negative gearing tax deduction. Also politically would be a very scary item to tackle.

What is most likely is following our Kiwi friends. Impose limits on LVR and specially interest only loans, in particular targeting investment property.

Also it is probable they could implement a much more focus on the foreign investments (now is extremely easy to bypass the foreign investment rules). I think it is probable as they also see that part of the Hong Kong riots has been spurred by Chinese investors buying Hong Kong property outspending the locals (and the UN statistic say that over 20 million wealthy Chinese are looking to buy foreign property in the next 10 years – Canada and US already imposed restrictions).

As stock market this will reflect on the Australian bank valuations (60% of their profits comes from lending) and building suppliers.

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